FTC COULD COMPEL DATA ON SLOTTING PRACTICES

WASHINGTON -- The Federal Trade Commission has said it will take a look at slotting allowances again -- but this time it may not just rely on volunteers.A staff report approved unanimously by the FTC last week called for the agency to use its "compulsory-process authority" to obtain "special reports from affected firms."The report went on to recommend that the "compulsory process be focused as narrowly

WASHINGTON -- The Federal Trade Commission has said it will take a look at slotting allowances again -- but this time it may not just rely on volunteers.

A staff report approved unanimously by the FTC last week called for the agency to use its "compulsory-process authority" to obtain "special reports from affected firms."

The report went on to recommend that the "compulsory process be focused as narrowly as the nature of the inquiry permits, in order to minimize any potential burden on business."

Congress has already earmarked specific funding to enable the FTC to investigate slotting allowances in the retail grocery industry, the report said.

The report is based on a public workshop on slotting allowances the FTC held last year. The report noted that at the workshop, "the panelists did not represent a complete cross section of the industry. Although the FTC staff invited and would have welcomed broader participation by large manufacturers and retailers, the industry members who actually participated tended to be the smaller firms."

The report went on to recommend five areas in particular that need additional study in regard to whether they threaten a harm to competition:

Exclusive-dealing contracts.

These contracts "warrant the closest attention among grocery marketing practices," the report said, particularly in markets with few competitors.

Slotting allowances and pay-to-stay fees.

These practices "could give rise to competitive challenges but often will not," the report said. It recommended a selective study of the topic.

Price and promotional discrimination.

While the report noted that this topic was "beyond the scope of the workshop," it said it does require further examination, although "any guidance in this area should be framed very carefully to avoid inhibiting individualized bargaining and free competition."

Category management.

Again, the report was divided on this issue. It observed the category management "can produce important efficiencies," but also warned that it "carried the potential for competitively troublesome exchanges of information."

Mergers enforcement.

The report urged the FTC to "remain alert" for the potential of mergers to allow retailers to pressure their suppliers as well as increase consumer prices. It is recommended the commission "exercise care" in ordering divestitures, so that efforts to "cure downstream [consumer] competitive problems do not inadvertently create upstream [manufacturer] problems of their own."